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August 31, 1998 and 1999. Respondent determined that petitioner
is liable for deficiencies of $65,772 and $53,459, respectively.
Respondent determined that petitioner is liable for section
6662(a) accuracy-related penalties of $13,154.40 and $10,691.80,
respectively.
Following the parties’ concessions, we decide first whether
petitioner may deduct expenses (disputed deductions) related to
its yacht. We hold it may not. We decide second whether
petitioner is liable for the accuracy-related penalties
determined by respondent. We hold it is. Unless otherwise
indicated, section references are to the applicable versions of
the Internal Revenue Code. Rule references are to the Tax Court
Rules of Practice and Procedure.
FINDINGS OF FACT2
Some facts were stipulated and are so found. The
stipulation of facts and the accompanying exhibits are
incorporated herein by this reference. Petitioner is a C
corporation that was incorporated in 1991 under the laws of
California. Its principal activity is the production of films,
2 The Court directed each party to file an opening brief and
a reply brief, the latter limited to making any objection to the
opposing party’s proposed findings of fact. Petitioner has not
filed a reply brief. We conclude that petitioner has conceded
respondent’s proposed findings as correct, except to the extent
that its opening brief contains proposed findings inconsistent
therewith. Peacock v. Commissioner, T.C. Memo. 2002-122; Morgan
v. Commissioner, T.C. Memo. 2000-231, affd. 23 Fed. Appx. 813
(9th Cir. 2001).
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